Mr. Devendra Surana, President, FAPCCI
in his welcome address stated that the Negative List under Service Tax is a Paradigm shift from the
existing system. The newer additions to the list of services often raised
issues of overlaps with the previously existing services, confounding both
sides as to whether some activities were taxed for the first time or were
already covered under an earlier, even if a little less specific head.

Mr. KarunendraS. Jasti, Chairman – Indirect Taxes Committee, FAPCCI in his
introductory Remarks stated that "When all the
information is entered online and returns are filed online, still the
department is insisting for visiting the ST department for submission of
documents is causing hardship to the assesses.

Mr. S. Thirumalai, Advisor – Indirect
Taxes Committee, FAPCCI during initiation of the discussion, he broadly
explained the authority to levy taxes by Central and State Governments. He
further informed that there are number of services identified from time to time
under various heads as taxable services. Considerable numbers of services
identified as taxable services have the dual nature of sale / deemed sale as
well as service. Advertising service, goods transport service, outdoor caterer
service, pandal and shamiyana service, mandap keepers service etc., are some of
the taxable services which have the dual nature of sale / deemed sale and
service.

Mr. M.K. Singh,
IRS.,
Commissioner of Customs, Central Excise & Service Tax in his address stated
that Education and creating awareness amongst
the trade and the tax payers on the recent developments in the tax areas is of
utmost importance and this interaction is indeed a welcome step in this
direction. He complimented FAPCCI for organizing this interactive meeting.

The focus of interaction
today is on Service Tax and rightly so, as this being the burning topic in the
area of indirect taxes. Service Tax is envisaged as the tax of the future. If you see the taxation structure in the
developed economies, you will find a comprehensive system of taxing the goods
and services across all sectors in the form of VAT or similar tax. You will also find that the share of service
sector in the GDP is substantially higher ranging from 60 – 80%. Service Sector is one sector which holds
promise for larger revenue generation without increasing the existing level of
taxation. Apart from revenue, the
comprehensive taxation on services aligned with taxation on manufacture and
trading is the prime requirement for bringing the VAT in its true form.

In
India, history of service tax is not very old.
We started with service tax on three services in 1994 (i.e. telephones,
stock broking and insurance) and collected a revenue of about Rs.400 Cr., in the first
year. From that point onwards, there has
been expansion in the scope and introduction of new services in the Service Tax
net. Initially, it was at a slower pace
which gathered momentum later. The
growth is evidenced by the revenue collection in the last financial year
2011-12 when it reached to Rs. 97000 Cr., from about 120 services. However, this growth in service tax was not
without any problems associated with it.
With the addition of new services, the issues relating to overlapping of
services emerged and thus increase in litigation.

Comprehensive
taxation of services thus came as an obvious and natural step not only to
remove the existing administrative difficulties but also to avoid leakages and
litigation. It was also the required and
desired step for widening the tax base and for eventual transition towards the
Goods and Service Tax. Thus, the new
approach to Service Tax, i.e., the Negative List approach, was thought of. After
deliberations and consultations with a wide section of stakeholders and
experts, finally the new provisions took effect from 1st July, 2012.

The new system of taxation of services is a paradigm shift from the existing one. Till now, i.e., before July, 2012, only specified services covered under the service tax provisions were being taxed. In the new system, all services, except those specified in the negative list are subject to taxation. Certain exemptions are available and have been consolidated under a Mega Exemption Notification.

The
department is conscious about the responsibility to provide explanations and
guidance to the taxpayer so as to ensure that the new provisions are understood
and implemented without any problem. We
are also aware that the intricacies of new changes might throw new doubts and
differences. The department has
therefore made efforts and has come up with the educational guide on taxation
of services. This guide is different
from the normal circular issued on such matters and gone in great details and
explanations to the provisions to provide utmost clarity. It is available on the CBEC Website.

Mr. R.S. Maheshwari, IRS., Addl. Commissioner of
Customs, Central Excise and Service Tax, Smt.N. Padmasri, IRS., Additional Commissioner – Service Tax, Mr. V. RamaKrishna, IRS., Assistant Commissioner (Technical &
Anti-Evasion)attended the meeting and clarified many issues like
Filing of hard copy of returns after e filing is not required, all Show Cause
Notice’s will be sent by RPAD by the department henceforth etc., along with the
Mr. M.K. Singh, IRS., Commissioner of Customs,
Central Excise and Service Tax, Hyderabad- II, Commissionerate.

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